Ataway Company has severe financial difficulties and is considering filing a bankruptcy petition. At this time, it has thefollowing assets and liabilities. The assets are stated at net realizable value.Assets (pledged against debts of $76,000)$128,000Assets (pledged against debts of $142,000) 56,000Other assetsLiabilities with priorityOther unsecured creditors86,00065,000206,000In a liquidation, how much money would be paid on the partially secured debt?

Step 1: Introduction to corporate liquidationWhen a corporation filed for bankruptcy and liquidates…

Answered: Ataway Company has severe financial…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Choose the correct. Prior to filing a voluntary Chapter 7 bankruptcy petition, Haynes Company pays a supplier $13,000 to satisfy an unsecured claim. Haynes wasinsolvent at the time. Subsequently, the trustee appointed to oversee this liquidation forces the return of the $13,000 by the supplier. Which of the following is true?a. A preference transfer has been voided.b. All transactions just prior to a voluntary bankruptcy proceeding must be nullified.c. The supplier should sue for the return of this money.d. The $13,000 claim becomes a liability with priority.
When the Beacon Computer Company filed for bankruptcy under CCAA, it had the following balance sheet information: Liquidating Value Total assets $30,400 Equity Claims Trade credit Secured mortgage notes Senior debentures Junior debentures Trade credit Secured mortgage notes Senior debentures Junior debentures Equity $ 6,700 9,900 11,900 16,900 -15,000 Assuming there are no legal fees associated with the bankruptcy, as a trustee, what distribution of liquidating value do you propose? (Do not leave any empty spaces; input a 0 wherever it is required. Enter the answers in dollars. Omit $ sign in your response.) Distribution of liquidating value $
Lucio Incorporated is undergoing liquidation. The statement of affairs shows unsecured claims without priority of 5,900,000; partially secured liabilities of 3,900,000; unsecured claims with priority of 365,000, and net free assets of 3,719,000. If unsecured claims wiyhout priority received 55% of their claims, how much will the partially secured liabilities receive?
13. In 2023, a corporation sells its business in an arm's length transaction for proceeds equal to FMV. At the time of the sale the business has accounts receivable of $123,000. The corporate vendor of the business and the purchaser agree that the realizable value of the receivables is $118,500. In 2022, the vendor had deducted a reserve for doubtful debts of $6,800. Which of the following statements is correct? A. If no joint election is filed under ITA 22, the vendor will have an addition to business income of $2,300. B. If no joint election is filed under ITA 22, the vendor will have an addition to business income of $6,800 and an allowable capital loss of $2,250. C. If a joint election is filed under ITA 22, the vendor will have a business deduction of $2,300. D. If a joint election is filed under ITA 22, the vendor will have a business deduction of $4,500. 14. During the current year, Denos Corporation incurred costs of $45,000 for leasehold improvements to its newly rented…
APA Corp. was forced into bankruptcy and is in the process of liquidating assets and paying claims. Unsecured claims will be paid at the rate of forty cents on the peso. ABC holds a P30,000 noninterest-bearing note receivable from APA collateralized by an asset with a book value of P35,000 and a liquidation value of P5,000. The amount to be realized by ABC on this note is
ABC Company is beginning the process of liquidation. ABC has prepared a statement of financial affairs that discloses the following data: Assets pledged with secured creditors $ 210,000 Secured liabilities 125,000 Assets pledged with partially secured creditors 290,000 Free assets (not including excess to be received from assets pledged on secured liabilities) 225,000 Unsecured liabilities with priority 121,000 Unsecured liabilities 450,000 ABC owes $45,000 to Wallace Company, an unsecured creditor (without priority). How much money can Wallace Company expect to collect from ABC?
Which company is most likely closest to filing for bankruptcy in the near term? A) Company A which shows $0 in profit B) Company B which shows $0 in cash C) Company C which shows $0 in inventory
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APA and Co., Inc. purchased a Cadillac automobile with little cash down and signed a note, secured by the Cadillac, for 48 easy monthly payments. When the company files for bankruptcy, the balance due on the Cadillac amount to P6,000,000. The car has a book value of P8,000,000 and a net realizable value of P4,000,000. The unsecured creditors of APA and Co. can expect to receive 50 percent of their claims. In the liquidation, the bank that holds the note on the Cadillac should receive:
A company preparing for a Chapter 7 liquidation has listed the following liabilities: Note payable A of $124,000 secured by land having a book value of $67,000 and a fair value of $87,000. Note payable B of $154,000 secured by a building having a $77,000 book value and a $57,000 fair value. Note payable C of $77,000, unsecured. Administrative expenses payable of $37,000. Accounts payable of $137,000. Income taxes payable of $47,000. The company also has these other assets: Cash of $27,000. Inventory of $134,000 but with a net realizable value of $77,000. Equipment of $124,000 but with a net realizable value of $67,000. Based on this information, how much will each of the company’s liabilities be paid at liquidation? Please don't provide answer in image format thank you
Big Corp. has been undergoing liquidation since December 1, 2020. As of July 31, 2021, the following data are available: P1,500,000 Liabilities not liquidated Liabilities to be liquidated P1,700,000 Assets acquired Assets realized P2,400,000 P2,250,000 Assets not realized P1,375,000 Liabilities assumed P2,625,000 Assets to be realized P2,750,000 Liabilities liquidated P1,750,000 Supplementary charges/debits P2,750,000 Supplementary credits P3,800,000 Answer the following questions: (answers can be repeated) Compute the ending cash balance of cash account (as of July 31, 2021) assuming that Choose... common stock and deficits are P2,750,000 and P750,000, respectively. What is the net gain/(loss) of Big Corp. from the liquidation? Choose...

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